United States Securities and Exchange Commission judge postponed a hearing for Rajat Gupta, the former
Goldman Sachs Group director scheduled to face accusations that he leaked inside information about the company.

Chief Administrative Law Judge Brenda P. Murray granted a six-month stay of the proceeding, which was scheduled for July 18, according to a June 20 order posted on the SEC’s website. The SEC said elsewhere on its website that the hearing had been “postponed indefinitely.”

Gupta, 62, was accused by the SEC in March of having passed confidential information to Galleon Group founder Raj Rajaratnam in 2008 about Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs. Rajaratnam, who was convicted May 11 of directing an insider-trading ring, faces almost 20 years in prison at his July 29 sentencing. Gupta, a former McKinsey Co. managing partner, isn’t facing criminal charges.

Rather than pursuing claims against Gupta in federal court, the SEC filed an administrative proceeding, which is heard by a judge employed by the agency. Gupta, who has denied the claims, sued the SEC in March, saying the administrative action would deny him the right to a jury trial.

A phone call to Gupta’s attorney Gary Naftalis wasn’t immediately returned. In the March lawsuit, Naftalis said “Gupta denies all allegations of wrongdoing and stands ready to mount a defense against each and every one of the commission’s charges.”

John Nester, an SEC spokesman, declined to comment.

Conference Call

According to the SEC, Gupta called Rajaratnam immediately after a September 2008 conference call during which the Goldman Sachs board considered and approved an investment by Warren Buffett’s Berkshire Hathaway as well as a public offering.

Within a minute of Gupta’s call, Rajaratnam arranged for Galleon funds to purchase more than 175,000 Goldman Sachs shares, the SEC said. Galleon sold the shares the following day after the information became public, making illicit profits of more than $900,000, the SEC said.

Gupta stepped down from the Goldman Sachs board last year and has also resigned from board positions at other companies, including Procter Gamble and AMR Corp.

To contact the reporter on this story:
Joshua Gallu in Washington at jgallu@bloomberg.net

To contact the editor responsible for this story:
Lawrence Roberts at lroberts13@bloomberg.net

Article source: http://www.bloomberg.com/news/2011-06-30/gupta-trial-postponed-indefinitely-in-sec-insider-trading-case.html

Cristo Redentor

Goldman Sachs is looking to boost its workforce in Brazil in an effort to expand its footprint in the emerging markets. ^[1] The bank is targeting growth in high margin businesses such as convertible debt and the securitization of receivables in the booming investment banking sector in the Latin American nation.

Other investment banks such as JPMorgan , Bank of America, UBS, Credit Suisse and Citigroup also have significant presence in the region.

Brazil – An Attractive Investment Destination

Brazil has posted impressive growth in agriculture, mining, manufacturing and service sectors to become one of the fastest growing economies in the world. ^[2] Investment banks are increasingly turning toward growing markets to increase their revenues, and Brazil has become one such important destination.

The Brazilian market is currently dominated by local banks such as Banco Itau BBA SA and Banco BTG Pactual SA that are using their strong local presence to maintain a stronghold on the market. ^[1] Other investment banks such as UBS are trying to gain market share by acquiring local firms to increase their penetration in the fixed income and securities markets. ^[3]

Goldman Sachs is relatively a new-comer to the Brazilian market. It commenced full operations in the country only in 2009 and hence may face tough competition from established players. ^[1] The bank intends to overcome this handicap by targeting high margins segments and may look to leverage its relationships with private equity firms to shore up business. Goldman Sachs is the leading advisor to private equity players, and has been leading this space for over past five years with a 34% share of the total mergers and acquisitions deals involving PE firms. ^[4]

Growth in Investment Banking Operations in Brazil

Bloomberg reports that total mergers acquisitions (MA) transactions in Brazil stands at approximately $53.5 billion in 2011. ^[1]. According to its data, Goldman Sachs is now among the top 10 MA and equity sales advisors in the country ranking fourth in Q1 2011. Goldman Sachs’ MA advisory contributes to 8% of our $164 price estimate for its stock – implying a 25% premium over the current market price. We estimate that the firm will increase its market share in global MA advisory to 25% by the end of our forecast period.

Goldman Sachs is also currently managing two IPOs that are expected to hit the market later this year. ^[1] It ranked the 9th largest equity underwriting business in 2011. We expect Goldman Sachs’ equity underwriting business to contribute to 60% of the revenues from its equity underwriting and debt origination division, which contributes approximately 7% to our valuation of the company.

Click here for our full analysis of Goldman Sachs

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Article source: http://blogs.forbes.com/greatspeculations/2011/06/30/goldman-sachs-sambas-into-brazilian-investment-banking/

According to a state filing on Wednesday, The Goldman Sachs Group Inc. (GS – Analyst Report) intends to lay off 230 workers in New York State due to economic reasons. The layoffs will be executed during the fourth quarter of 2011 and the first quarter of 2012.

The State Department of Labor made The New York State Workers Adjustment and Retraining Notification Act, known as the WARN Act, effective on February 1, 2009.

Under the provisions of the law, New York-based companies having 50 or more workers in New York State are required to give 90 days notice to the State if they are planning to reduce the local workforce. Further, the law requires prior notices for plant closing, large layoff, relocation, or reduction in working hours.

The law was enacted with the intention that the Labor Department will have sufficient time for the retrenched employees, in providing them information regarding unemployment insurance and other resources.

Goldman’s New York layoffs represent less than 1% of its 35,400 employees as of March 2011. The layoffs would be in addition to the company’s annual retrenching of workers, who perform in the bottom 5% or so. However, Goldman is also hiring employees in China, India and Brazil following growth in such markets.

Goldman coupled with other large Wall Street banks have started reducing their workforces to cut costs following the slowdown in economic and market activity. Further, some large Wall Street banks are laying off employees due to weak trading volumes and stringent regulations on some parts of their business.

Other Wall Street banks planning layoff include Barclays Capital and Credit Suisse Group AG as they are struggling with reduced revenue from trading stocks and bonds. Further, according to a regulatory filing, Bank of New York Mellon Corp. (BK – Analyst Report) also informed the labor department about its plans of cutting 124 jobs in its treasury services operations lockbox. The jobs cut will take place in segments beginning July 1, 2011 and continue through March 31, 2012.

In March 2011, Wells Fargo Company (WFC – Analyst Report) also announced that it will lay off approximately 200 employees, including 82 employees in San Antonio, 30 in Addison and 67 in Bedford, Texas in its home mortgage division.Wells Fargo employs about 13,000 people in metro Des Moines.  The company’s Home Mortgage division, which is based in West Des Moines, captures approximately 25% of the U.S. home lending market.

Wells Fargo also announced the elimination of 68 positions at a Vancouver call center, which supports collection of loans for Wells Fargo Financial division, the company’s consumer finance subsidiary. The action followed as the customers are paying down debt, eliminating the need for debt collectors.

Bank of America Corp. (BAC – Analyst Report) also announced jobs cut of approximately 100 employees in its consumer and small business banking unit as of March 2011. The layoffs form a part of BofA’s ongoing efforts to overhaul its consumer banking unit.

We believe that the present job cuts will enable Goldman to reduce expenses, alleviating bottom-line pressure.

Goldman currently retains its Zacks #4 Rank, which translates into a short-term Sell rating. However, considering the fundamentals, we are maintaining a long-term Neutral recommendation on the stock.

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